S&P: CII Carbon still on negative watch

Standard & Poor's said its B+ corporate credit and B+ senior secured debt rating on CII Carbon LLC remain on CreditWatch with negative implications.

S&P said it continues to be concerned about the company's liquidity and coke supply following operating disruptions caused by hurricanes Katrina and Rita at some of CII Carbon's plants as well as local oil refineries that supply CII Carbon with high quality coke, a critical raw material.

CII Carbon estimates it will have to spend $16.5 million to repair damage caused by the hurricanes. While the company has a $15 million insurance policy to cover such damages, the timing of insurance proceeds is uncertain, S&P said.

A negative confluence of events, such as delays in receiving insurance proceeds and delays in the start-up of the oil refiners, could cause liquidity to decline substantially leaving little cushion for any other unforeseen event, S&P said. Should this happen, ratings could be lowered at least two notches, if not more, depending on circumstances, S&P said.

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